Lindsay Klein, an Alston & Bird senior associate, was quoted in an Inside Mortgage Finance article, “Fraud Risk Elevated for Non-QMs as Sector Expands” (subscription required), on rising fraud risk as the non-qualified mortgage sector grows.
Lindsay discussed why debt service coverage ratio loans attract fraud and what warehouse lenders and originators can do about it, pointing to a recent $100 million scheme in Baltimore. “The conditions that enabled the fraud—rapid market growth, increased competition among originators, relaxed verification standards—in the Baltimore scheme predated that particular case,” she said.